Net income for Pinnacle Bank shares Corporation (OTCQX:PPBN), the one-bank holding company (the “Company”) for First National Bank (the “Bank”), was $1,043,000.00 or $0.670 for each basic and diluted share for the quarter finished September 30, 2K19, and $3,712,000.00 or $2.400 for each basic and $2.380 for each diluted share for the nine months finished September 30, 2K19. Net income was $636,000.00 or $0.420 for each basic and $0.410 for each diluted share and $2,823,000.00 or $1.840 for each basic share and $1.820 for each diluted share, respectively, for the similar periods of 2K18. Merged results for the quarter and nine month periods are unaudited.
Net income generated during the first nine months of 2K19 represents an $889,000.00 or 31.00 percent increase as contrast to the similar time period of the previous year, which was driven by higher net interest income and noninterest income combined with lower provision for loan losses, all offsetting higher noninterest expense.
The net interest income improvement was because of growth of loans from September 30, 2K18 to September 30, 2K19 and higher yields on loans and investments. Noninterest income raised as a result of higher fee income from sales of mortgage loans and commissions derived from sales of investments. Lower levels of net charge-offs and continued strong asset quality resulted in a lower provision for loan losses. These improvements more than offset the increase in noninterest expense because of the growth of our Company.
Profitability as measured by the Company’s return on average assets (“ROA”) improved to 1.040 percent for the nine months finished September 30, 2K19, as contrast to 0.820 percent generated during the first nine months of 2K18. Correspondingly, return on average equity (“ROE”) raised for the nine month time period of 2K19 to 11.150 percent, contrast to 9.450 percent for the similar time period of the prior year.
The Company produced $13,325,000.00 in net interest income for the first nine months of 2K19, which represents an 11.00 percent increase as contrast to the $11,990,000.00 generated for the similar time period of 2K18. Interest income raised $1,792,000.00, or about 13.00 percent, because of higher volume of loans and raised yields on loans and investments, while interest expense raised $457,000.00, or about 33.00 percent, because of the continued growth of deposits and higher cost of funds. As a result of a 40 basis points increase in yield on average earning assets, which was partially offset by a 13 basis points increase in the cost to fund earning assets, the Company’s net interest margin raised to 4.050 percent for the first nine months of 2K19 as contrast to 3.780 percent for the first nine months of 2K18.
The provision for loan losses was $151,000.00 for the first nine months of 2K19 as contrast to $575,000.00 for the first nine months of 2K18. The allowance for loan losses was $3,489,000.00 as of September 30, 2K19, which represented 0.890 percent of total loans outstanding. In comparison, the allowance for loan losses was $3,372,000.00 or 0.900 percent of total loans outstanding as of December 31, 2K18. Non-performing loans to total loans raised slightly to 0.280 percent as of September 30, 2K19 contrast to 0.240 percent as of year-end 2K18, and was also up slightly from 0.260 percent as of September 30, 2K18. Allowance coverage of non-performing loans as of September 30, 2K19 reduced to 316.00 percent from 367.00 percent as of year-end 2K18. Administration continues to view the allowance balance as being sufficient to offset potential future losses associated with problem loans.
Noninterest income for the first nine months of 2K19 raised $417,000.00 or about 14.00 percent to $3,408,000.00 from $2,991,000.00 for the first nine months of 2K18. This increase was mainly driven by a boost in fees on sales of mortgage loans and commissions on sales of investments as the Bank’s Mortgage Division and First National Advisors continue to grow business after being restructured during 2K18.
Noninterest expense for the first nine months of 2K19 raised $1,048,000.00 or about 10.00 percent to $11,995,000.00 from $10,947,000.00 for the first nine months of 2K18. The increase is mainly attributed to increases in salaries and employee benefits and expenses associated with the overall growth of the Company to include the establishment of the new Downtown Lynchburg Branch.
Total assets as of September 30, 2K19 were $481,627,000.00, up $11,016,000.00 or 2.00 percent from $470,611,000.00 as of December 31, 2K18. The principal components of the Company’s assets as of September 30, 2K19 were $391,603,000.00 in total loans, $46,456,000.00 in securities and $14,772,000.00 in cash and cash equivalents. During the first nine months of 2K19, total loans raised $15,537,000.00, or 4.00 percent, from $376,066,000.00 as of December 31, 2K18, while securities reduced $3,370,000.00, or about 7.00 percent, from $49,826,000.00. As contrast to September 30, 2K18, loans raised 5 percent and investments reduced 8.00 percent.
Total liabilities as of September 30, 2K19 were $435,326,000.00, up $6,826,000.00 or 2.00 percent from $428,500,000.00 as of December 31, 2K18. The growth of liabilities was driven by an $18,487,000.00 or about 22.00 percent, increase in demand deposits since year-end partially offset by decreases in savings and time deposits. The Company continues to focus on the expansion of core deposit relationships, which has assisted the Company maintain a low cost of funds, decrease its dependency on time deposits and provide relationship expansion opportunities.
Total stockholders’ equity as of September 30, 2K19 was $46,301,000.00 and consisted mainly of $41,938,000.00 in retained earnings. In comparison, as of December 31, 2K18, total stockholders’ equity was $42,111,000.00. The Company has continued to increase capital and improve its capital ratios while also paying a cash dividend to shareholders in each of the last twenty-seven quarters. Both the Company and Bank remain “well capitalized” for each all regulatory definitions.